Which proposed use cannot pass the legal-permissibility screen without evidence that the necessary permission is reasonably probable?
Correct Answer
D) A currently prohibited proposal with no support for probable approval
A presently prohibited proposal requires credible evidence that necessary permission is reasonably probable before a changed legal use is relied on. A permit requirement is not automatically fatal when approval is reasonably probable. Legal permission does not replace physical or financial tests.
Why This Is the Correct Answer
Option D is correct because a currently prohibited proposal with no support for probable approval fails the legal-permissibility screen. Highest and best use analysis considers reasonably probable modifications of land use regulations, so a changed legal use needs credible evidence that permission is reasonably probable.
Why the Other Options Are Wrong
Option A: A permitted proposal with insufficient financial return
Option A is a permitted proposal with insufficient financial return. It passes the legal test because it is permitted; its weakness is financial feasibility, which is a separate test.
Option B: A permitted proposal whose routine permit is supported as reasonably obtainable
Option B is a permitted proposal whose routine permit is supported as reasonably obtainable. Because approval is reasonably probable, the permit requirement does not cause it to fail the legal screen.
Option C: A feasible proposal with lower value than another feasible use
Option C is a feasible proposal with lower value than another feasible use. That concerns the maximally productive test, not legal permissibility, and nothing indicates it is prohibited.
Legal, Physical, Financial, Maximal
The four highest and best use tests are legally permissible, physically possible, financially feasible and maximally productive. A legal failure is about prohibition without probable approval, not about return or value.
How to use: Sort each option by which test it actually describes before choosing.
Exam Tip
When a question names one test, eliminate options whose problem belongs to a different test, such as financial return or relative value.
Common Mistakes to Avoid
- -Treating any permit requirement as a legal failure
- -Confusing financial feasibility with legal permissibility
- -Assuming a rezoning will be approved without evidence
Concept Deep Dive
Analysis
This question tests the legally permissible test of highest and best use. A use currently prohibited by regulations can be considered only if a modification of those regulations is reasonably probable. Permit requirements are not automatically fatal when approval is reasonably probable, and financial or value comparisons belong to other tests.
Background Knowledge
Highest and best use is the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible and results in the highest value. The legal test considers existing land use regulations and reasonably probable modifications to them. Each test is applied separately, so passing one does not replace the others.
Real-World Application
A developer asks an appraiser to value a residential lot assuming a commercial use the current zoning prohibits. With no evidence that a rezoning is reasonably probable, the appraiser does not treat the commercial use as legally permissible in the highest and best use analysis.
More Market Questions
Market analysis confirms that seller financing at 3%, versus a 6% market rate, increased a comparable sale price. What adjustment removes that financing premium?
At the same effective date, reliable value indications support $800,000 for continued use of a property as improved and $500,000 for its cleared site. Immediate demolition costs $100,000. These are the only feasible alternatives, with no other costs or timing differences. Which alternative has the higher net value?
Other relevant conditions equal, growth in the number of households with effective purchasing power in a market tends to have which effect?
In a lakefront market, paired sales show that direct water frontage has the largest price effect of any feature. Which approach to comparable selection best follows from this evidence?
Which circumstance can cause highest and best use as improved to differ from highest and best use as though vacant?
A small group of buyers in a market looks for specialized features that are uncommon in the broader housing supply. What term describes this group?
A neighborhood analysis should include all of the following EXCEPT:
A site legally permits at most 40 units and can physically support 50. Supported comparable analyses find 30 and 40 units financially feasible, with 40 units producing the highest net land value after costs, timing and required return. Which use is maximally productive among these alternatives?
Market evidence isolates a subject value loss from off-site landfill odors. Which listed cause is an external-obsolescence influence?
In the neighborhood life cycle, which stage is marked by relatively stable values and little new construction?
People Also Study
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
An appraiser is comparing a property's existing use with redevelopment, both lawful and feasible. Stabilized annual net operating income (NOI) is $100,000 as it exists and $250,000 if redeveloped, and the capitalization rate for each is 10%. Redevelopment would be immediate at a total cost of $2,000,000, with no delays or other costs. What is the higher net indicated value of the two alternatives?
Next Question
A purpose-built fire station has specialized apparatus bays and operational facilities with limited utility for alternative occupants. Which term best describes those specialized design characteristics?